From Nonprofit to Forprofit | Etie Hertz from Loris

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Alexander Ferguson 0:20
Welcome to UpTech Report. This is our Founders Journey series UpTech Report is sponsored by TeraLeap. Learn how to leverage the power of video at Teraleap.io. Today, I’m joined by my guest, Etie Hertz, who’s based in New York. He’s the CEO of Loris. Welcome back. It’s good to have you on man. Thank you. Thanks so much. Now, I definitely recommend to go back and listen to Part one where we heard a bit more about Loris it’s a real time coaching technology that sits on top of a customer service platform. fascinating concept and the future they painted for customer service. This one though, in our conversation today. I want to hear a bit more about your insights as a leader. I mean, this is not the first company that you have led. You joined Lloris about two years ago, is that correct? All right. And but you’ve actually led several companies founded other companies over the years. Take me back like Were you always just fascinated with technology? Or did that come a little bit later?

Etie Hertz 0:00
Raising money comes with expectations right? So you have to you have to produce a lot in a short amount of time constantly. So it’s a kind of a different pace. Are you willing to run at that pace? That’s that’s a question for the business. Is it right for you? Is it right for the business is

Unknown Speaker 0:13
right for the market?

Alexander Ferguson 1:18
in question. I mean, I’m,

Etie Hertz 1:21
so I went to college when I was a freshman went to University of Illinois. Netscape was invented there, Marc Andreessen, Max Levchin. So super fascinating. It was CS was too hard for me. So I ended up studying business. And then I’ve gone to law school. So I took a long journey to come to tech. But what I what I was on the side, and then and then coming back from from law to be in tech. I was I was an m&a Vc lawyer at a big firm and represent a lot of startups and tech companies. And I saw kids that look like me, not at my age plus or minus just doing amazing things. And at some point, you know, you say, Well, I’m papering these folks ideas, I have some ideas of my own, maybe I could try something. I had always worked since I was very young. I had like, I always worked, whatever, since I was supermarket at age 12. shoveling, shoveling snow at age eight. I always had side businesses and different things. So

Alexander Ferguson 2:11
no stranger to work or hard work or starting new things.

Etie Hertz 2:14
Right. So So even when I was a lawyer, I started some businesses actually started a tech company on the side at night while I was a lawyer. I think I was like my first foray into into trying Yeah, to do that.

Alexander Ferguson 2:26
That was one of the ones that was that payment revolution.

Etie Hertz 2:31
That was Yeah, so there’s a lot of failed companies in the in my history. That one’s actually not a failed company. But we started a friend of mine was a banker, also working 100 plus hours a week and we meet in the middle of night, and we had this concept to to build DVD vending machine companies, machines, sorry, and put them into universities. In the States. This is like before, Redbox Netflix was still you’d order DVDs in the mail. So we manufactured in Korea, and then we would bring them here or NYU records and we start you know, putting them all over the place. We decided not to raise money, which was a mistake it had we raised money probably could have been a really interesting company was the right time. But we were both so exhausted from doing what we’re doing. So we found a third partner who helped run it and the business ran for a decade plus did fine, so that was good. But anyways, I guess that was my first like real transition from Intertek.

Alexander Ferguson 3:21
I love some, like you just blew by a bunch of lessons learned right there that others? Like, I’m curious, because getting VC funding versus just bootstrapping there. I’ve always heard both sides to the story and going from that company, and then being able to move from there. Are you a fan of like, just at the immediate beginning of like, let’s get some funding in play here? Or, hey, let’s build a little while before we bring in any funding.

Etie Hertz 3:48
So it totally depends. My payments company, we didn’t raise any money, we sell it, we bootstrap. We can debate the merits of that. But in general, I guess what I would say everything worked out. But it’s it’s not simple black and white question. But I think it very much depends on the business and the timing in the market. People don’t realize I was having a conversation with someone recently, you know, you go on Twitter. And you hear all these great stories about all these companies raising money. And how amazing is that everyone who’s trying and failing is not tweeting. So you get like a false sense of how successful everyone is at doing this. But running a lifestyle business can be incredibly rewarding, right? If you can raise if you can bootstrap a company by yourself or with founders, co founders, that might be incredible. You get to set your own time, your own hours, no one’s really telling you what to do and you can grow your business at your pace. That’s phenomenal. Raising money comes with expectations, right? So you have to you have to produce a lot in a short amount of time constantly. So it’s a kind of a different pace. Are you willing to run at that pace? That’s that’s a question for the business. Is it right for you? Is it right for the business is right for the market?

Alexander Ferguson 4:56
So it’s an interesting way is it making a self question to you You’re asking yourself the question, do I want to have that demand constantly pushed on me make returns quickly get things going? Or do I want to have just let me take my time. But it’s not only yourself? Because you made the point of it? What is the market? Because you could easily get out of business because you didn’t grow fast enough because the market demanded, you have to go or your competitor overtake you? Did I hear that? Correct?

Etie Hertz 5:23
100%. So like my DVD Vending Machine Company, if someone if I raise money from a savvy investor, they would have pushed us, we probably would have tried to compete with the red boxes. And if Netflix is right, we were in like, right, can you

Alexander Ferguson 5:36
hear was that again? That you were

Etie Hertz 5:39
2000? Don’t give me 2002?

Alexander Ferguson 5:43
Okay, okay.

Etie Hertz 5:45
Yeah, it was back. And I make this joke all the time. But my, you know, my friends, like, we should try to compete with Netflix, I was like, who is waiting three days for a movie. That’s ridiculous. That will never work in such a silly business. So I was I was totally wrong. In a business that’s growing quickly, you can’t go small, except if the competitor is going to eat your lunch. If it’s a zero sum game, and it’s a fast moving market, you have to raise money, and you have to outrun everyone.

Alexander Ferguson 6:08
Now for payment revolution. I mean, that was that was actually acquired. It was a fight. You had a five, six years and then got acquired by shopkeep. Is that correct?

Etie Hertz 6:17
Yeah. So we started in 2009. And it was acquired in 2015.

Alexander Ferguson 6:24
What would you What would you say is some of the biggest reasons or or tactics that may allowed you to grow to the point that you did, they were able to be acquired and continue growing, what was like that first initial key pieces that allowed you to grow so quickly?

Etie Hertz 6:37
I mean, there’s a lot you know, when you have a podcast or a conversation over a few minutes, it all sounds glorious. But the beginning is so hard and painful. And I met my wife, like when I left my law firm, and I went to try to start all these businesses and I couldn’t grow a beard. I was making no money for several years. But now the story sounds amazing, because it worked. But at the beginning, you know, we were making no money. It was a big debate at the beginning, like, do we shut down? Do we invest more? What do we do? I was like,

Alexander Ferguson 7:02
you this is at a time where you had quit all your jobs, and you’re you’re married. And and your wife’s like, what are you doing? Is that is that happening? And that’s

Etie Hertz 7:10
when I when I left my law firm. I said this is gonna be a roller coaster might not work out. But I promise you won’t be boring. Okay, where

Alexander Ferguson 7:16
to put it. I like that.

Etie Hertz 7:18
Yes, that was that, to me turned out to be the case. But at the beginning, we had to make a lot of bets. So even when we started paying revolution, we to get to build a platform we needed to we had to guarantee all kinds of business that we were going to bring all kinds of revenue, and basically would go under, if it failed, we didn’t have anything to lose, really. So that wasn’t that. But then a couple bets along the way paid off. We partnered with all kinds of folks that were selling restaurant point of sale technology, retail point of sale technology, we have to invest in some of those integrations. And that was really expensive. That was a bet that ended up paying off. But it was a slog for a while.

Alexander Ferguson 7:53
I mean, a couple pieces there one is like you honed in on all right. integrations or connections with with partnerships, that’ll how we’ll actually start the initial growth. Okay. Yeah,

Etie Hertz 8:05
like to be specific. When we started, it was just us going out and trying, you know, to build this business on our own. It was three of us, and it was really slow. And then in New York City, I kept running into people. So my partners were in Chicago, I was in New York, and I kept running into folks that were reselling other kinds of technology, technology that seemed complimentary. So restaurant point of sale, for example. And I would say to folks, okay, we have this payments platform, maybe we can work together, who are you working with? Now I’m working with someone on the west coast, I’d never met him, well give us a chance. And then we realized that if we were super transparent, and we can power, these folks are also small businesses to do better. They trusted us believed in us, and then they started telling all their friends. So we started getting, you know, we would do a couple deals a month, and then we start doing 100 deals a month from this network. So that was a big deal. And then a couple years in, and we met the founder of shopkeep. It was like the founder, three interns. First iPad based point of sale system ever invented first app in the App Store before square existed. And after that meeting, it seems evident to me that that was the future, the whole world was gonna live on an iPad and a retail store and restaurant. And basically, I said, My mission in life now is to find anyone building something like this. So we ran around the country, we found a few folks like that, and partner with them. And then they started sending us a lot of business. And then basically, that was the snowball. So snowball is really the best analogy. If you just start with a few flakes, it’s impossible. It takes forever and then suddenly, like, oh, maybe there’s something here and then it’s then you get momentum, then the ball starts rolling.

Alexander Ferguson 9:32
Was there ever a moment where you’re like, this isn’t gonna work all the time? Like, how did you how did you get through that and just keep pushing, like, what was it just a mental picture that this is going to happen?

Etie Hertz 9:46
It’s scary. I mean, in a sense, you’re betting on yourself and you think on your partners, right? You think that we’re going to figure it out? Even if it goes bad? how bad could it go every day? You’re kind of doing the calculus of you know, what’s the upside? what’s the downside? The day before we were acquired actually see, shopkeeper that was one of the board I forgot? asked me like you look, you look nervous. I’m like, yeah, I’m assuming the business is gonna die tomorrow. He’s like, no, but we’re buying the company tomorrow. So we haven’t closed yet.

Alexander Ferguson 10:14
Right? So anyway, it’s it’s almost like a always prepared for the worst like, I don’t know, but what can happen but I’m just gonna keep preparing and just move plan for whatever.

Etie Hertz 10:24
Yeah, I mean I think most small business owners that’s an anxiety you kind of live with it’s part of its par for the course right? You have to like assume that things would be horrible tomorrow and have to figure it out.

Alexander Ferguson 10:32
Art of being able to grow is having the right team, we’re did it stay the three of you guys until you acquired and you’re just like mixing up or what did that look like? What did the team look like?

Etie Hertz 10:43
No. So we started off, we ended up when we sold her a couple dozen people. But we we started off with I think the first hire maybe was on customer service. And we had this amazing woman. And then she said okay, where’s you know, where’s the Office of my guy? I’m actually in New York, and the office in Chicago is, is Eric’s kitchen. So we got to go to Eric’s kitchen tomorrow. And that’s that was kind of the first hire. And from there, we grew up customer service. We grew out sales. And then yeah, what would

Alexander Ferguson 11:12
you say some of the key hires that really made the difference, and helping you both grow and scale but also stay strong and not collapse?

Etie Hertz 11:23
If it was, you know, the team in general was great. I think the culture of the company culture itself was just very, very good was

Alexander Ferguson 11:32
was there something about the culture? Like, did you were you intentional about it? Or did it just kind of happen? Because that’s how you guys were at the beginning.

Etie Hertz 11:39
I think in general, we want you know, you always want to work with people, they’re honest, that are smart. And to reciprocate that as a manager, as a leader you want to be I think transparent, especially for small businesses, people come to work for small businesses, for different reasons. I’m working at IBM. And I think you should be able to have transparency into what’s happening and how the business is doing get opportunities you don’t get in other places. So I think it’s more like a family. You kind of I mean, sounds Yeah,

Alexander Ferguson 12:05
but it is it is very true. And you mentioned earlier, one of your first hires was customer service person is that I hear that correctly. Which of course nicely ties in to to Loris I mean, you’re completely focused on it now what, what kind of the early lessons around then customer service did you start to acquire, building an internal team at one of the payment revolutions,

Etie Hertz 12:26
pain revolution, again, it was all of our sweat, all of our tears, all of our dollars, right? Any customer would leave, you feel like you got shot shot in the back, right? It was so painful to let someone down. And that that feeling kind of started back then and never left. And we were acquired by shopkeep them a much bigger company, several 100 people, just the care team was almost 100 people. So you want to keep that sentiment and you know that as a user of a product or a service, you want loyalty from the brand too. It’s it’s a win win, right? So that’s kind of something that we always kept top of mind. And I think that’s very much bled into what we do at Loris.

Alexander Ferguson 13:04
for you as a leader, how you manage your time I mentioned has changed from from the early days of you know, bootstrapping and making things happen. What would you say? were some of the key learnings of of as a leader? How should I use my time? Where should I invest it any any lessons learned there.

Etie Hertz 13:25
So if you think of like the evolution, even from Human Revolution, the shopkeeper pen revolution, whatever the fire was, that’s what you’re you’re focused on, that’s what you’re putting out, then we go to shopkeep. It’s a huge company. And you’re within like three days, you have 40 meetings on your calendar. Right? You have no say in what you’re doing, it’s completely you’re completely the whole into everyone else’s time. And that’s, that takes a lot of work to filter out, right to make sure that you’re actually spending time in the right way. A lot of that in a bigger organization is in a bigger organization is not up to you. As a leader, let’s say you know, growing a tech company, now you have to be very mindful of how you spend the time, you want to give everyone attention. Again, your small business, people are growing the eat, they want to you know, we have stand up still every morning, what’s also due to COVID. But we all talk to each other every day doesn’t matter where everyone is. We try to be very transparent, very open with one another. So that’s a great use of time. And you have to find time, I think time best spent really thinking about how you can spend the week if you look at your calendar, you should be able to tell what you’re prioritizing.

Alexander Ferguson 14:27
Do you look at a week for you personally?

Etie Hertz 14:31
I mean, what are like the three things I want to accomplish this week? Am I trying to close a deal? Am I meeting with investor? am I working on this new product release that’s coming out? What are the three things that have to be done by the end of the week? So I try to kind of set up the week for success and predict what’s going to happen and then at the end of the week, take a stake and say well that I did a good job. I did a bad job. Let’s do better next week. You never get it right. You know, a lot of it is just you know you’re hoping for the best and working really hard. And you just assume over time you get a little smarter about it

Alexander Ferguson 14:58
at each Time for you as a leader, is there any books, podcasts, audio books that you’ve read listened to that you enjoy and would recommend? We should have asked me

Etie Hertz 15:09
to have a long, long list in my Google Keep that narrowed down its focus, I will tell you Yes, I was. I’m an avid podcaster and reader. And

Alexander Ferguson 15:18
so there’s kind of two categories that people will bring up. One is business, for obvious reasons, whether they’re there, how you grow and lead. And then you have the other categories is where you gather insights from that are completely non business related. And usually people have something in both categories. Anything that pops in my mind, maybe what’s the best book, but one that comes to your mind right now in either category?

Etie Hertz 15:43
Yeah, I try to like switch it up. You know, I listen to like a business book. And I’ll podcast something else. And I’ll say, business books, everyone will say high output management. I thought atomic habits, not necessarily a business book, but very good for

Alexander Ferguson 15:56
speaking of running their regular keeping things going.

Etie Hertz 16:00
I would say, in my business, their business books, I guess, prediction machines highly recommend, it’s about machine learning and data science and where it’s going and how you apply that in different parts of business. incredible book. Okay. Um, that led me to a book I’m reading now 1000 brains, which is also really fascinating. Basically, how you create memory, how you do all kinds of how the brain works, and how machines are going to try to deal with that. So that’s super fascinating.

Alexander Ferguson 16:25
That is, like, computers are being there. We’re building new models, machine learning models, ai models, based off of how we think if I am getting that correctly.

Etie Hertz 16:35
Yes. It’s great. I’m splendid. And the vile I read recently was really great. About Winston Churchill, and I’m, yeah, now I’m really old letters of Warren Buffett, someone sent me some rereading that from the 60s and 70s.

Alexander Ferguson 16:50
It’s like getting insights from many different places, they’ll have to be just one specific vein of knowledge.

Etie Hertz 16:57
Yeah, completely try to a lot of stuff overlaps. It’s hard to find stuff outside of your sphere, like you have to interact with people that are interesting and not doing what you’re doing so that they can recommend books that will enhance what you’re doing, you know, you otherwise would have come across. So yeah. So a lot of podcasting, you know, fits into that. Well.

Alexander Ferguson 17:15
Any favorite podcast? Yeah, like I’m curious, also podcasts that you listen to anyone?

Etie Hertz 17:21
I mean, I listen to a lot of them, they go up and down. I mean, I can tell you my favorite podcast ever is probably Jamie Foxx on Tim Ferriss the first time. Okay. I have so many life lessons in that it was incredible. DAX shepherds podcast is awesome. That’s like the best masters of scale. Reid Hoffman’s is very good. Starting greatness. So one of our investors, floodgate naval podcast called starting greatness is really good, as well. So I’d highly recommend that. And then I get one offs here and there.

Alexander Ferguson 17:51
Just kind of a fun last question, at similar acid on our first part of the interview, if you could wave a magic wand and have any futuristic tech, not necessarily customer service related, but any futuristic tech be in existence today? What would you have?

Etie Hertz 18:09
Okay, that’s different than the question you asked me last time.

Alexander Ferguson 18:11
It is it is, could be anything.

Etie Hertz 18:15
So recently, I’ve been thinking a lot about that fact. I mean, for the last few years, obviously, we’re all consuming different information, like everyone’s living in their own distorted reality. So to the you know, to my point of like, you want to podcast and get Twitter recommendations and book recommendations from different people. Otherwise, you’re just in your silo, and you’re all your biases are being confirmed. Noise by Daniel Kahneman, also another good book. But it’s all everything he writes about bias. So if I could create a technology, it would basically ensure that at least there’s some truth that is agreed upon by all of humanity, because that seems to be a huge problem today.

Alexander Ferguson 18:50
Interesting technology to be able to get a ground truth that everyone would

Etie Hertz 18:56
agree. Like, in the 60s, we both watch the same news channel. And we would agree that the news happened today, right, that something happened today, we landed on the moon, whatever, you can’t even agree that we landed on the moon, right? You can’t agree that anything happened. And we had an election, like there are people that are going to debate all kinds of things. So

Alexander Ferguson 19:15
that’s an interesting proposition, can technology solve that problem? Or is that actually a natural human inability to not all agree on on a specific item? Right, I

Etie Hertz 19:26
think it’s more of a natural human inclination to see confirmation of thereby of your biases. So people that agree with you hear more from them and follow them and and then this is spiral where you’re sure you’re right.

Alexander Ferguson 19:39
That’s actually a whole nother piece of I’ve had some conversations other other tech leaders around how is algorithms being used or abuse in social media to reinforce and should it be that way? And how to honestly How do we fix that problem? How to machine learning algorithms get trained improperly, or an untrained them

Etie Hertz 20:01
Is that impossible. It’s, it’s a much deeper, we need another 45 minutes,

Alexander Ferguson 20:05
or 45 minutes to dig into that. But but I get the sense that you kind of came around in a roundabout way to technology from the business understanding but the books that you’re reading, you are vested in the future of where technology is going. And particularly when it comes to machine learning, and taking the insights of realizing the worst may happen, but you’re just gonna keep pushing forward and and be able to make it happen. I’m excited for the journey that you are on. Thank you so much for sharing a few insights from from your journey, and for being on the series today.

Etie Hertz 20:39
Thank you so much, Alexander. It’s a pleasure. It’s really fun.

Alexander Ferguson 20:42
And definitely recommend everyone. Go back, listen to part one, and you can hear more about Loris or you can also go over to loris.ai. And you can be able to dig in a bit more about having real time coaching on top of a customer service, your customer service platform. It’s cool stuff. We’ll see you guys on the next episode of UpTech Report. Have you seen a company using AI machine learning or other technology to transform the way we live, work and do business? Go to UpTech report.com and let us know